Econ exam 2
low inflation and lower value of the $ will lead to
higher exports in the future
the US Trade Balance =
$ -56.6 Billion
Current Account Deficit =
$ 128 Billion (up 26% q/q), 2.6% of GDP
Trade Deficits Due to:
- insufficient Saving - Budget Deficit
The trade balance is a function of:
- relative econ growth rates - US Dollar Exchange Rate - relative inflation rates
% change in Real Exchange Rate
-2.8% y/y
What is affecting imports?
-higher energy prices is pushing up imports -Capital & consumer imports rose as concumer confidence rose -past appreciation is weighing on imports -risks
3 components of the Current Account Balance
1. Balance of G&S (Trade Deficit) = -154 billion -Export G&S = $564 billion (up 3.2% q/q) -- Expectations of increasing int. rates -> strong $ -> change relative prices -> G&S Trade Deficit - Import G&S = -$718 billion (up 1.4% q/q) -- Strong US Econ & consumer -> increase imports --Rising oil prices -> rising nominal Exports 2. Balance of Primary income =$61 Billion - investment income & Compensation 3. Balance of Secondary income = -35billion - private remittances and Gov. Transfers
Why did the door Exchange Rate Fall? from 2002-2007.... $ fell 24% (in relation to Euro) from Aug. '07 - Aug. '08.... $ fell 12%
1. subprime credit mess 2. fed lowering money market rates 3. weaker us investment prospects 4. Trade Deficit 5. US Gov. Budget Deficit 6. inflation concern -> PPP: in the LR, $/Euro = P(us)/ P(EU)
17. Following a severe banking crisis, the average length of time that it takes the unemployment rate to begin to fall is _______ years. A) 4.8 B) 25 C) 2 D) 10.5
A) 4.8
48) How might a budget deficit affect the balance of trade? A) A budget deficit raises interest rates, which raises exchange rates, and reduces the balance of trade. B) A budget deficit raises interest rates, which raises exchange rates, and increases the balance of trade. C) A budget deficit reduces interest rates, which reduces exchange rates and reduces the balance of trade. D) A budget deficit reduces interest rates, which raises exchange rates, and reduces the balance of trade.
A) A budget deficit raises interest rates, which raises exchange rates, and reduces the balance of trade.
23. Core capital goods in the durable goods report is a proxy for which of the following? A) Business investment spending. B) Civilian aircraft and defense spending. C) Consumer spending on durable goods. D) Motor vehicle orders.
A) Business investment spending.
29. Suppose that commodity prices across the economy begin to fall and consumers and firms begin to expect a lower rate of future inflation. What do we expect to happen to the SRAS curve and short-run Phillips curve? A) The SRAS curve will shift to the right, and the short-run Phillips curve will shift downward. B) The SRAS curve will shift to the right, and the short-run Phillips curve will shift upward. C) The SRAS curve will shift to the left, and the short-run Phillips curve will shift downward. D) The SRAS curve will shift to the left, and the short-run Phillips curve will shift upward.
A) The SRAS curve will shift to the right, and the short-run Phillips curve will shift downward.
2) Between 2004 and 2005, ticket sales to Toronto Blue Jays games increased by nearly 33 percent as many more Canadian citizens traveled to the United States to see the Blue Jays play. Which of the following would not be a possible explanation for this? A) The U.S. dollar appreciated relative to the Canadian dollar during this time. B) The value of the Canadian dollar relative to the U.S. dollar increased during this time. C) The U.S. dollar depreciated during this time. D) The Canadian dollar appreciated during this time.
A) The U.S. dollar appreciated relative to the Canadian dollar during this time.
9) What is a "structural" relationship? 9) _______ A) a relationship that depends on the basic behavior of consumers and firms and remains unchanged over long periods B) any relationship that cannot be anticipated C) a relationship between any two variables that is temporary D) a relationship that depends on the size of firm investments in capital such as buildings and other structures
A) a relationship that depends on the basic behavior of consumers and firms and remains unchanged over long periods
19. When an economy has debt deflation: A) aggregate demand decreases as borrowers' real debts increase, which leads to less spending. B) aggregate demand increases, since the real debt burden is reduced. C) the economy moves quickly to its potential output. D) aggregate demand is not affected, since real variables are not affected.
A) aggregate demand decreases as borrowers' real debts increase, which leads to less spending.
3) Tax cuts on business income increase aggregate demand by increasing 3) _______ A) business investment spending. B) government spending. C) wage rates. D) consumption spending.
A) business investment spending.
57) Shares of stock and long-term debt, including corporate and government bonds and bank loans, are bought and sold on A) capital markets. B) the stock market. C) foreign exchange markets. D) commodity markets.
A) capital markets.
11) The government purchases multiplier equals the change in ________ divided by the change in ________. 11) ______ A) equilibrium real GDP; government purchases B) government purchases; consumption spending C) government purchases; equilibrium real GDP D) consumption spending; government purchases
A) equilibrium real GDP; government purchases
13. Economic growth slowed in the first quarter of 2015 due to all the following factors except: A) falling long-term interest rates. B) bad winter weather. C) less energy investment. D) rising value of the dollar
A) falling long-term interest rates.
15. The trade-off between rate of return and liquidity is that assets that offer a: A) higher rate of return also offer lower liquidity. B) There is no trade-off between rate of return and liquidity. C) lower rate of return also offer lower liquidity. D) higher rate of return also offer higher liquidity.
A) higher rate of return also offer lower liquidity.
60) An increase in capital inflows will A) increase the equilibrium exchange rate. B) increase capital outflows. C) decrease capital outflows. D) increase net foreign investment.
A) increase the equilibrium exchange rate.
46. To close a recessionary gap using monetary policy, the Federal Reserve should ________ the money supply to ________ investment and consumer spending and shift the aggregate demand curve to the ________. A) increase; increase; right B) increase; increase; left C) decrease; decrease; right D) decrease; decrease; left
A) increase; increase; right
52) The United States is called a debtor nation because A) it has a large current account deficit and is simultaneously funded by foreign investment. B) it has a large financial account deficit that is used to fund the current account deficit. C) it has a large balance of payments deficit that is used to fund the current account deficit. D) U.S. capital outflows are much greater than U.S. capital inflows.
A) it has a large current account deficit and is simultaneously funded by foreign investment.
17) What can the Federal Reserve do to reduce the natural rate of unemployment? 17) ______ A) nothing B) follow contractionary monetary policy that will increase inflation C) follow expansionary monetary policy that will increase inflation D) follow expansionary monetary policy that will reduce inflation
A) nothing
21. Rational expectations theory suggests that: A) policies that are expected will have no effect on output or unemployment. B) economic agents take into account past actions in order to make their current decisions. C) discretionary policies are best at bringing about changes in output. D) monetary policy that is expected will have the greatest impact on changing output levels.
A) policies that are expected will have no effect on output or unemployment.
25) If the U.S. government places tariffs on imports from countries that have been accused of deliberately undervaluing their currencies, the price of these imports will ________ and the demand for the undervalued currency will ________. 25) ______ A) rise; fall B) fall; fall C) fall; rise D) rise; rise
A) rise; fall
42) Fluctuating exchange rates can alter a multinational firm's profits and losses. The U.S. corporation, Motorola, produces cell phones and sells cell phones in Mexico. If the dollar depreciates against the peso, then Motorola's revenues from these operations should ________ and its costs from these operations should ________. 42) ______ A) rise; rise B) fall; rise C) fall; fall D) rise; fall
A) rise; rise
40) A decrease in expected inflation will A) shift the short-run Phillips curve to the left. B) increase the natural rate of unemployment. C) reduce real wages. D) shift the long-run Phillips curve to the left.
A) shift the short-run Phillips curve to the left
20. If the country's balance of payments on the current account is positive: A) the balance of payments on the financial account must be negative so that the sum of the accounts equal zero. B) the country's imports are greater than its exports. C) the balance of payments on the financial account is also positive. D) a country's flow of funds into the country must be greater than the flow of funds out of the country.
A) the balance of payments on the financial account must be negative so that the sum of the accounts equal zero.
37. Purchasing power parity refers to: A) the nominal exchange rate for which a market basket would cost the same in each country. B) how many units of foreign currency a dollar will buy. C) how many foreign assets the United States is buying. D) how many foreign assets a foreign country is buying.
A) the nominal exchange rate for which a market basket would cost the same in each country.
18) What is the NAIRU? 18) ______ A) the nonaccelerating inflation rate of unemployment B) the natural accelerating inflation rate of unemployment C) the nongovernmental agency of inflationary rate unions D) the new accrual index of real unemployment
A) the nonaccelerating inflation rate of unemployment
53) If interest rates in the United States rise, A) the value of the dollar will rise as the foreign investors increase their holdings of U.S. investments. B) the value of the dollar will fall as foreign investors sell their U.S. investments. C) the value of the dollar will fall as foreign investors increase their holdings of U.S. investments. D) the value of the dollar will rise as foreign investors sell their U.S. investments.
A) the value of the dollar will rise as the foreign investors increase their holdings of U.S. investments.
42. A liquidity trap is a situation in which: A) using expansionary monetary policy is not effective because the nominal interest rate is almost zero. B) lenders are trapped by large loans with declining rates of return. C) aggregate demand falls because consumers do not have enough liquidity to consume. D) using expansionary monetary policy is not effective because the real interest rate is negative.
A) using expansionary monetary policy is not effective because the nominal interest rate is almost zero.
41) Matt's real wage in 2010 is $26.80. If the price level is 104, what is Matt's nominal wage? 41) ______ A) $30.80 B) $27.87 C) $26.80 D) $25.77
B) $27.87
39. Which of the following was an argument in favor of using discretionary fiscal policy in fighting the Great Recession? A) The lags associated with monetary policy would be destabilizing. B) Monetary policy could not be effective, since interest rates were near zero. C) If taxes were increased, the budget could be balanced. D) If government spending decreased, the budget surplus would increase.
B) Monetary policy could not be effective, since interest rates were near zero.
27) Why did the United States abandon the gold standard in the 1930s? A) The Treasury Department in the United States found it was cheaper to print paper money instead of gold coins. B) The government wanted to rapidly expand the money supply in response to the Great Depression. C) New sources of gold were discovered, so the price of gold plummeted, dramatically reducing the value of the dollar. D) The government wanted to move away from a floating exchange rate system to a fixed exchange rate system.
B) The government wanted to rapidly expand the money supply in response to the Great Depression.
43. Capital requirements for banks include all of the following EXCEPT: A) an attempt to offset the change in incentives caused by deposit insurance. B) an attempt to reduce deposits. C) an attempt to reduce a bank owner's incentive for excessive risk taking. D) the excess of a bank's assets over its deposits and other liabilities.
B) an attempt to reduce deposits.
49. If an economy's short-run Phillips curve shifts up, this is most likely due to: A) an increase in the unemployment rate. B) an increase in expected inflation. C) a contractionary fiscal policy. D) a change in the inflation rate.
B) an increase in expected inflation.
12. Included in the M2 definition of money is(are): A) travelers' checks. B) currency in circulation, money market funds, and travelers' checks. C) money market funds. D) currency in circulation.
B) currency in circulation, money market funds, and travelers' checks.
3. If the Federal Reserve conducts a $10 million open-market sale and the reserve requirement is 20%, the monetary base will: A) decrease by $50 million. B) decrease by $10 million. C) increase by $10 million. D) increase by $8 million.
B) decrease by $10 million. (question asks about monetary base, not monetary supply)
48. Suppose the required reserve ratio is 10% and a depositor withdraws $500 from her checkable deposit. The money supply will ______ if the banking system does NOT hold any excess reserves. A) decrease by $500 B) decrease by $4,500 C) decrease by $5,000 D) be unchanged
B) decrease by $4,500
44. A vicious downward spiral among banks in which each institution's failure increases the likelihood that another will fail is a(n): A) maturity transformation. B) financial contagion. C) asset bubble. D) multiplier effect
B) financial contagion.
10. The Great Moderation consensus in macroeconomics is that: A) decreases in aggregate output can be traced to poor monetary policy. B) in the long run, neither monetary nor fiscal policy can reduce unemployment below the natural rate. C) monetary and fiscal policies are equally effective at curing recessions. D) prices are sticky in the long run but flexible in the short run.
B) in the long run, neither monetary nor fiscal policy can reduce unemployment below the natural rate.
Which of the following is NOT one of the problems facing almost all major economies after the 2008 financial crisis? A) low growth of output B) inflation C) high unemployment D) high interest rates on public debt
B) inflation
30. When the quantity of money demanded is less than the quantity of money supplied: A) people will begin to sell their nonmonetary assets. B) interest rates will fall. C) interest rates will remain unchanged. D) people want to decrease their money holdings.
B) interest rates will fall.
37) An increase in U.S. federal government budget deficits that raises U.S. interest rates relative to the rest of the world should A) increase net exports. B) lead to a current account deficit. C) raise the trade balance. D) cause the dollar to depreciate. E) decrease foreign portfolio investment.
B) lead to a current account deficit. E) decrease foreign portfolio investment.
36. In the income-expenditure model, expansionary monetary policy leads to: A) higher interest rates, an increase in planned investment spending, and an increase in equilibrium GDP. B) lower interest rates, an increase in planned investment spending, and an increase in equilibrium GDP. C) higher interest rates, a decrease in planned investment spending, and a decrease in equilibrium GDP. D) lower interest rates, a decrease in planned investment spending, and an increase in equilibrium GDP.
B) lower interest rates, an increase in planned investment spending, and an increase in equilibrium GDP.
27. Long recessions often follow banking crises because: A) the vicious cycle of deleveraging that follows leads to overpriced assets. B) monetary policy is not very effective because banks hold on to excess reserves and are unwilling to lend them out. C) banking crises may cause a surplus of credit, so that interest rates fall to levels so low that investors earn very little in interest income. D) consumer and investment spending increase too rapidly, causing high rates of inflation.
B) monetary policy is not very effective because banks hold on to excess reserves and are unwilling to lend them out.
22. Before the 2008 financial crisis, shadow banks were: A) strictly regulated and therefore offered their customers lower rates of return than depository banks. B) not subject to regulations, such as capital requirements and reserve requirements. C) much smaller than depository banks. D) required to hold more reserves than depository banks
B) not subject to regulations, such as capital requirements and reserve requirements
14. For Keynes, changes in aggregate demand had their greatest impact: A) in the long run. B) on the aggregate output level. C) equally on the aggregate output level and the aggregate price level. D) on the aggregate price level.
B) on the aggregate output level.
11. If a high inflation rate leads people to ______ their money holdings, this may lead to a further increase in the money supply and ______ inflation. A) increase; higher B) reduce; higher C) reduce; lower D) increase; lower
B) reduce; higher
38. In March 2015, the Consumer Confidence Index rose tot he highest level since August 2007 due to all the following factors EXCEPT: A) lower debt burdens. B) rising inflation. C) the improving labor market. D) rising stock prices
B) rising inflation.
1) What factors are not important in determining exchange rate fluctuations in the long run? A) relative rates of productivity growth across countries B) speculating in currency markets C) relative price levels across countries D) preferences for domestic and foreign goods across countries
B) speculating in currency markets
10) Monetary policy has a ________ effect on aggregate demand in a(n) ________ economy, and fiscal policy has a ________ effect on aggregate demand in a(n) ________ economy. 10) ______ A) stronger; closed; weaker; open B) stronger; open; weaker; open C) weaker; closed; weaker; closed D) weaker; open; weaker; open
B) stronger; open; weaker; open
34) How does an increase in a country's exchange rate affect its balance of trade? A) An increase in the exchange rate reduces imports, raises exports, and reduces the balance of trade. B) An increase in the exchange rate reduces imports, raises exports, and increases the balance of trade. C) An increase in the exchange rate raises imports, reduces exports, and reduces the balance of trade. D) An increase in the exchange rate raises imports, reduces exports, and increases the balance of trade.
C) An increase in the exchange rate raises imports, reduces exports, and reduces the balance of trade.
5. Which of the following is NOT one of the factors pushing down on the Treasury Yield Curve? A) Euro-zone Debt Crisis B) Recession deflation fears C) Rising inflation expectations D) Mid-East turmoil
C) Rising inflation expectations downward pressure caused by: 1. fed decreases SR rates to help banks 2. fed reinvests treasuries (bonds) 3. Eurozone: 0 int. rate policy Upward pressure caused by 4. treasury deficit 5. rising inflation expactations 6. faster econ growth expectations
8) If the Fed is using policy to combat inflation, what is likely to happen in the foreign exchange market and to the foreign exchange value of the dollar? 8) _______ A) The demand for the dollar will decrease and the foreign exchange value of the dollar will rise. B) The demand for the dollar will increase and the foreign exchange value of the dollar will fall. C) The demand for the dollar will increase and the foreign exchange value of the dollar will rise. D) The demand for the dollar will decrease and the foreign exchange value of the dollar will fall.
C) The demand for the dollar will increase and the foreign exchange value of the dollar will rise.
34. When the Federal Reserve buys Treasury bills, this leads to: A) an increase in the Federal Reserve funds rate. B) a decrease in the money supply. C) an increase in the money supply. D) an increase in short-term interest rates.
C) an increase in the money supply.
26. The primary cause of the banking crises that occurred between 1970 and 2007 in poor countries was_________. The primary cause in wealthy countries was _______. A) capital requirements that were too low; capital requirements that were too high B) too much government regulation; too much government regulation C) corruption; real estate bubbles D) capital requirements that were too high; the purchase of too much government debt
C) corruption; real estate bubbles
46) Consumer confidence fell in March because of all of the following except A) rising gas prices B) high unemployment C) falling debt burdens D) slow wage growth
C) falling debt burdens
9. The recent decline in import prices will have all the following effects on the economy except: A) the Federal Reserve will keep their foot on the monetary accelerator. B) the Fed will wait to normalize monetary policy. C) increasing short-term interest rates. D) keeping U.S. inflation low.
C) increasing short-term interest rates.
24. If the Chinese government wants to keep the real and nominal exchange rates between the yuan and the U.S. dollar fixed at 8 yuan per dollar, the: A) interest rate in China must be higher than the interest rate in the United States. B) inflation rate in China must be constantly higher than the inflation rate in the United States. C) inflation rate in China must be equal to the inflation rate in the United States. D) inflation rate in China must be constantly lower than the inflation rate in the United States.
C) inflation rate in China must be equal to the inflation rate in the United States.
31. All of the following are responsibilities of the Federal Reserve EXCEPT to: A) set the discount rate. B) control the monetary base. C) mint bills and coins. D) oversee and regulate the banking system.
C) mint bills and coins.
45. Ricardo believed that short-run changes in aggregate demand affected aggregate output as well as the price level. He believed that there was a role for monetary policy in managing the economy, but he advocated a simple monetary rule that would increase the money supply at a constant rate to grow the economy. Ricardo was best described as a: A) new classical economist B) supply-side economist C) monetarist D) Keynesian economist
C) monetarist
50. To avoid falling into a liquidity trap, most central banks: A) aim at a target of zero inflation so that inflation expectations are zero too. B) conduct open-market operations to change the money supply instead of changing the discount rate. C) seek a positive but small inflation rate rather than zero inflation. D) target inflation rather than the money supply.
C) seek a positive but small inflation rate rather than zero inflation.
32) The balance of payments includes which three accounts? A) the net investment account, the net exports account, and the net transfers account B) the capital flows account, the financial account, and the trade account C) the current account, the financial account, and the capital account D) the balance of trade account, the net foreign investment account, and statistical discrepancy
C) the current account, the financial account, and the capital account
28. If banks decide to hold some of their excess reserves instead of lending them all out, then: A) depositors will have to borrow more in order to increase the money supply. B) the money multiplier becomes 1 divided by the excess reserves. C) the money multiplier will be less than 1 divided by the required reserve ratio. D) a loan of $1 will lead to a change in the money supply by a multiple amount equal to 1 divided by the required reserve ratio.
C) the money multiplier will be less than 1 divided by the required reserve ratio.
41. Suppose your grandma sends you $100 for your birthday and you deposit that $100 into your checking account at the local bank. The reserve ratio is 10%. Based upon this deposit, the bank's reserves have increased by _____ and the bank's checkable deposits have increased by _____. A) $100; $90 B) $90; $100 C) $10; $100 D) $100; $100
D) $100; $100
31) The core inflation rate in the U.S. is currently close to the Federal Reserve's explicit target of ______. A) 1% B) 0% C) 3% D) 2%
D) 2%
47) How does an increase in the budget deficit affect the demand for dollars and the supply of dollars on the foreign exchange market? A) The demand for dollars falls, and the supply of dollars rises. B) The demand for dollars falls, and the supply of dollars falls. C) The demand for dollars rises, and the supply of dollars rises. D) The demand for dollars rises, and the supply of dollars falls.
D) The demand for dollars rises, and the supply of dollars falls.
32. Holding everything else constant, if the U.S. dollar falls against the Mexican peso: A) Mexico's goods will look cheaper to the United States B) one peso buys fewer U.S. dollars. C) U.S. goods will look more expensive to Mexico. D) U.S. goods will look cheaper to Mexico.
D) U.S. goods will look cheaper to Mexico.
16. Contractionary monetary policy causes _______ in the price level in the short run and _______ in the price level in the long run. A) no change; no change B) a decrease; no change C) no change; a decrease D) a decrease; a decrease
D) a decrease; a decrease
1. Assume that the economy is contracting and unemployment is rising. Which of the following would be a logical explanation for a sudden fall in the unemployment rate even while the economy continues to contract? A) a decrease in the level of employment B) an increase in the level of employment C) a reduction in the number of discouraged workers D) an increase in the number of discouraged workers
D) an increase in the number of discouraged workers
4) Which of the following would be most likely to induce Congress and the president to conduct expansionary fiscal policy? A) increase in consumption spending. B) increase in net exports. C) decrease in oil prices. D) decrease in investment spending.
D) decrease in investment spending
33. During the credit crunch in the Great Depression, the spread, the interest rate on Baa corporate bonds minus the interest rate for government borrowing: A) was equal to zero. B) fluctuated randomly. C) became negative. D) grew to more than 7%
D) grew to more than 7%
4. Expansionary monetary policy will ______ interest rates and _______ savings in the short run. A) raise; decrease B) lower; decrease C) raise; increase D) lower; increase
D) lower; increase (expansionary mon. policy => increase MS => decrease int. rates => increase consumption, decrease saving
6. Monetary neutrality implies that in the long run: A) changing the money supply does not have any effect on the aggregate price level. B) aggregate demand is independent from monetary policy. C) aggregate supply is independent of monetary policy. D) monetary policy does not affect the level of economic activity.
D) monetary policy does not affect the level of economic activity.
58) A higher inflation rate can lead to lower unemployment if ________ mistakenly expect the inflation rate to be lower than it turns out to be. A) employers, but not workers B) both workers and employers C) workers, but not employers D) neither workers nor employers
D) neither workers nor employers
47. If government decides to print money to finance a deficit: A) borrowers will be penalized because they will owe more as inflation increases. B) real GDP will decrease in the long run. C) the Fed must sell bonds in the open market. D) people who hold money will be penalized as inflation increases
D) people who hold money will be penalized as inflation increases
25. If the required reserve ratio rises: A) excess reserves will also rise. B) the amount of reserves in the banking system will decrease. C) the money multiplier will also rise. D) the banking system must keep more of a deposit in its reserves.
D) the banking system must keep more of a deposit in its reserves.
8. If a country with floating exchange rates uses an expansionary monetary policy: A) the domestic interest rate increases, demand for the domestic currency increases, supply of the domestic currency decreases, and the exchange rate increases. B) the domestic interest rate falls, demand for the domestic currency remains unchanged, supply of the domestic currency increases, and the exchange rate decreases. C) the domestic interest rate falls, demand for the domestic currency decreases, supply of the domestic currency increases, and the effect on the exchange rate is ambiguous. D) the domestic interest rate falls, demand for the domestic currency decreases, supply of the domestic currency increases, and the exchange rate decreases.
D) the domestic interest rate falls, demand for the domestic currency decreases, supply of the domestic currency increases, and the exchange rate decreases.
7. If the Federal Reserve increases the discount rate: A) the money supply is likely to increase. B) the money supply is not likely to change. C) the federal funds rate must decrease. D) the money supply is likely to decrease.
D) the money supply is likely to decrease. increase DR=> decrease MS decrease DR=> increase MS
35. The NAIRU is: A) a trade-off between unemployment and inflation. B) a rate at which it is possible to achieve lower unemployment by accepting higher inflation. C) the inflation rate at which the unemployment rate does not change over time. D) the unemployment rate at which inflation does not change over time.
D) the unemployment rate at which inflation does not change over time.
2. If the Federal Reserve conducts an open market purchase, holding everything else constant: A) there will be a decrease in unemployment in the long run. B) there will be no effects on output, unemployment, or the price level in the long run. C) there will be an increase in the aggregate output level in the long run. D) there will be an increase in the aggregate price level in the long run.
D) there will be an increase in the aggregate price level in the long run.
what factors are impacting the treasury yield curve
Downward pressure: - Feds short term rate policy (force interest rates down) to help bank - Fed reinvesting treasuries - Eurozone 0 interest rate policy Upward Pressure: - Treasury Decifit - rising inflation expectaton - faster economic growth expectation (rotate out of bonds and into stock)
In January, Nominal Exports: _________ by _____%
Nominal Exports fell by 1.3% m/m, up 6.7%y/y
In January, Nominal Imports: _________ by _____%
Nominal imports fell by -0.1% m/m, up 7.4% y/y
National Income Identity in an open Economy
Y = C +I + G + NX NX = Y - (C + I + G) -> implies that NX = ( Y - C - G) - I = S - I